Monday, October 20, 2014

Health Exchanges: No Free Lunch

There is no such thing as a free lunch.

Milton Friedman (1912-2006), Conservative economist

I recently did 12 interviews with participants in direct pay independent practices for my book Direct Pay Independent Practice – Medicine and Surgery (Kindle,

Two things surprised me about the interviews:

One, the repetitive claim by direct pay practitioners that health exchange-inspired plans,now held by 7.3 million Americans, 80% of whom have received subsidies, were the best salesman for direct pay care without 3rd party involvement.

Two, the customers for these plans were a mix of patients – the insured, the uninsured, the rich, the poor, the young, the old, those covered by employers, those covered by government.

How could this be?

ObamaCare, with its exchanges offering subsidized federal care, was purported by some policy makers and big government enthusiasts to be a free lunch- a free ride on the federal dollar for those who could not afford health care.

Well, as it turns out, the health exchanges have a catch. The cheapest plans, the Bronze and the Silver, have a hook. The hook is high out-of-pocket costs in the form of high deductibles and co-pays.

For those of you not in the know, out-of-pocket costs are costs paid with your own money rather than money from another source (the company you work for, the insurance company, or government.)

And co-pays, short for co-payments, are paid for by you, the beneficiary, of the health service, in addition to payment made by the insurer.

In the U.S., co-payments for health exchange plans are defined by the insurer policy, of which there are many, by the person for a medical service or policy. Co-pay amounts vary from $20 to $50 for a doctor visit, $50 to $150 for an emergency room visit, $20 to $50 for a prescription, depending on whether the prescription is for a generic or brand name drug.

The big stick in the federal ointment, however, are rising deductibles. For Bronze plans, deductibles average $5,081 for individuals and $10,386 for families. For Silver plans, deductibles are $2907 for individuals and $6078 for families.

The federal government “protects” individuals from soaring deductibles by placing a limit on deductibles of $6350 for individuals and $12,700 for families. And the government has a maximum of out-of-pocket costs of $6500 for individuals and $13,200 for families.

To many consumers, who often must pay co-pays and deductibles before receiving the service, these federal ceilings are un unpleasant surprise , even when subsidies cover much of the cost and even when employers soften the cost by partially covering the deductible and co-pay. The high deductibles and ubiquitous co-pays smack of an shell-game.

Consumers are beginning to understand new rules of the health exchange game, as set forth in detail in “Unable To Meet the Deductibles and Out-of-Pocket, “, Abby Goodnough and Robert Pear, New York Times, October 18, 2014). This understanding may be why many of these consumers are turning to direct cash-only care as a less expensive, less complicated, and more convenient alternative.

Sunday, October 19, 2014

Who Shall Benefit from All That Health Care Spending?

All that is and shall be.

Sophocles (495-BC 404 BC) , Antigone

I have a weakness for the word “shall.” To me, “shall” implies command and determination as to what should be, rather than what will be.

“Shall” has moral weight. That may be why I entitled a 1988 book And Who Shall Care for the Sick? The Corporate Transformation of Medicine in Minnesota (Media Medicus).

I was concerned then, as I am now, that physicians were losing control of health care to managed care organizations. My concern now is how much control government should or shall have.

I was concerned too that patients were losing control, a question that Victor R. Fuchs, PhD, a Stanford economist raised in his 1974 classic Who Shall Live? Health Economics and Social Choice (Basic Books). I remember a Harvard Business School professor telling me, “ What a title. I would kill to come up with a title like that.”

Which brings me to the title of today’s blog “Who Shall Benefit from Health Care Spending ?” Perhaps the title should be “Who Should Benefit from Health Care Spending?”

According to the Centers for Medicare and Medicaid Services, the projected spending on health care in 2014 will be $3.06 trillion. The government will spend over $1 trillion of that amount for 50 million Medicare recipients and 110 million Medicaid beneficiaries, or $6250 per person. If you divide $3.06 trillion by 320 million, the U.S. population, that comes to about $9,565.50 per individual. The national debt now runs about $58,000 for every man, woman, and child in the U.S. The fastest growing part of that debt is health care entitlements for Medicare and Medicaid.

Who should benefit from these vast present and future expenditures?

• Should it be government, with the number of people it employs to administer health programs and the political power it conveys upon the governing party? Is government capable of protecting and providing “affordable health care” for all, as implied by the title of the current health law “The Patient Protection and Affordable Care Act?” Evidence to date, nearly five years after ACA enactment, with the law is running roughly 15%-20% over budget, and the Congressional Budget Office giving up estimating what it will cost over the next 10 years, creates doubt about government’s ability to contain costs and benefit those who need care.

• Should it be those agencies and health plans who administer the law? It is estimated that administrative costs eat up one-third of health costs. Chief cost consumers in the administrative realm include government itself and those ubiquitous health plans, including giants UnitedHealth, which has just announced it will invest heavily in health exchanges by introducing two dozen new plans into federal exchange markets, and WellPoint, Inc, which holds monopoly positions in more a dozen major metropolitan markets.

• Should it be participants in “medical-industrial complex” – that vast array of health care product distributors, such as pharmaceutical companies, device manufacturers, big data providers, or companies like General Electric. GE has just announced it earns $3.7 billion producing biologically specific medicines and high-tech diagnostics to screen for disease and health indicators.

• Should it be hospitals and doctors, who together account for about 50% of health spending? There is little doubt that hospitals are benefiting from Medicaid expansion, driving by health exchanges, which now give them predictable sources of revenue. But at the same time more than half of hospitals are being heavily penalized for hospital readmissions and for meeting federal regulations, which make up 25% of their costs. As for doctors, their earnings have been flat for the last 10 years, and they say public and private regulations account for 50% if their overhead.

• Or should it be health care consumers themselves? Nearly 150 million Americans get their health insurance through their employer. But most employers are changing their plans to comply with new expenses from the Affordable Care Act and new demands they cover full-time employees working over 30 hours by shifting costs to workers, cutting benefits, and introducing health savings accounts and new health care arrangements with tax-deductible spending and high deductiables. These plans may be called “consumer-directed”, “account-based plans,” “flexible-health savings accounts ,” or as one cynical observer noted, “ OWAs (Other Weird Arrangements )”. Some employers are even offering employees compensation for not enrolling in their health plans. It’s all a little weird and bewildering.

• This bewilderment has resulted in a growing number of consumers, approaching 5-10%, saying, in essence, “To hell with it, I will take a chance and pay for my health care directly without insurance coverage.” Most workers are studying the options, doing the math, weighing the incentives, and considering other alternatives before considering buying a policy through public exchanges.

To conclude:

It’s all more than a little mind-boggling,

All of this health cost tugging and toggling.

One answer may be universal tax credits,

To minimize those overall health cost debits.

Saturday, October 18, 2014

Ebola, Government, the Health System, and Unrealistic Expectations

Oft expectation fails, and most oft there

Where most it promises.

Shakespeare (1564-1616), All’s Well That Ends Well

We must scrunch or be scrunched.

Charles Dickens )1812-1870), Great Expectations

It may seem a strange thing to say. But I believe the U.S. suffers from unrealistic expectations. We expect government, health, and hospital officials to get things right the first time around. This is unrealistic. People, and believe it or not, including politicians, are never perfectly competent in things they are never experienced before. Disease prevention, diagnosis, and treatment are learning curves.

When the story of Ebola is the U.S. is written, it will be about how the center for disease and prevention, hospitals, and health care professionals made mistakes . It will be about what occurred when the virus first surfaced in a Dallas hospital, how the hospital ER personell were caught off guard, why the hospital was unprepared to deal with the virus, why it infected two nurses on the wards, why the CDC faltered in not forbidding an infected nurse to take a flight from Dallas to Cleveland, how government officials made false reassurances and misleading statements, and what the impacts were when these miscues rippled across the land.

It will also be about political finger pointing, about casting blame. It will be about blaming President Obama, Doctor Friedman and the Centers for Disease Control and Prevention, airline companies, hospital executives, emergency room personnel, faulty disease prevention protocols. Unfortunately, as a WallStreet Journal"editorial says, “Life does not obey protocols. Failure, uncertainty, and error are inevitable in human affairs. And institutions learn from mistakes.”

Whomsoever we blame, do not blame the nurses. They are on the frontlines, the bear the brunt of exposure to infectious disease, and they do what they have to do, even without proper training and protective personal gear. The nurses are the ones most likely to be exposed to infected blood and body fluids and to direct skin contact.

Do not blame the nurses. Do not blame hapless government bureaucrats, do not blame the CDC, do not blame the hospitals, do not blame the doctors, do not blame the public health system. Blame the Ebola virus. The little SOB has a mind and mutations of its own.

Our job is to collaborate across government, private, and health care sectors to contain and kill the virus. Our job is to cooperate to find a vaccine to prevent it and a drug to treat it. Our job is to spot Ebola outbreaks more quickly. Our job is to develop a fast finger-prick blood test for Ebola. Our job at the point of care is to diagnose the disease on the spot and to hydrate and isolate the patient. Our job is to prevent the victim or exposed person from entering or leaving an Ebola victim’s home, to prevent he or she from travelling, and to monitor every person with whom the infected person came in contact for as long as necessary. Our job is to develop computer systems to facilitate this tracking. And lastly, our job is to work together to prevent his hybrid of Ebola and fear from spreading. We can do it. We have done it or are doing it with measles, polio, smallpox, HIV/Aids and we can do it with Ebola.

As Doctor Larry Brilliant, previously part of the WHO team that eradicated smallpox, has remarked, “The Ebola outbreak in West Africa is a humanitarian and public health crisis, and we must do more to help the victims while avoiding our own ‘panic fever.’”

Friday, October 17, 2014

Ebola - Uncharted Waters and Seas of Speculation

If you’re in uncharted waters, you are in a situation unfamiliar to you, in which you have no experience and don’t know what might happen, leading to endless speculation.

American Idiom

With the spread of the Ebola virus to America, with the cropping up of three documented cases and fear of dozens more to come, we are in midst of a sea of speculation of how the West African Ebola epidemic will affect the U.S. people.

These events and possible chain of future events, have created a political crisis for the Obama administration, It responded by holding an emergency cabinet meeting on Ebola and appointing a political czar, Ron Klain, a Washington insider, who is long on politics and short on health care, and who served as chief of staff for Vice-Presidents Gore and Biden, to orchestrate the federal response, which I will predict will eventuate in a travel ban from West Africa.

What is at stake here may be a political disaster for Democrats based on lack of competence in handling events protecting the public’s health care prior to the midterm elections. This criticism may be unfair because this looming pandemic, which will probably never develop, is unprecedented, human mistakes will be made, lessons are being rapidly learned, and new protocols are being put in place.

Predicting the future of the Ebola epidemic has become an exercise in predicting the future through mathematical models.
Two of these models are frequently cited.

One is the Center for Disease Control and Prevention mode, which explains what may happen in this article , “Estimating the Future Number of Cases in the Ebola Epidemic - Liberia and Sierra Leone, “by nine authors in the CDC’s Morbidity and Mortality Report , September 26, 2014.

The report predicts the number of cases will double every 20 days from September 23 for the next 30 days, reaching 14, 000 cases (37,000 when corrected for under-reporting, and by January afflicting 550,000 people (1.4 million when corrected for under-reporting).

Two is the World Health Organization (WHO ) report, “Ebola Virus Disease in West Africa – The First Nine Months of Epidemic and Forward Projections, “ which is reported in the October 16, 2014 New England Journal of Medicine, The WHO numb ers are much more conservative and estimate 20,000 cases by early November.
Both reports assume the Ebola epidemics will proceed unchecked , which is unlikely .

An October 1 report in Vox by Suzanne Locke “The 6 Myths About Ebola” sets forth these myths about Ebola,

1) Ebola outbreaks are unstoppable. Ebola outbreaks since 1976 have been stopped in rural West Africa.

2) Ebola is a death sentence – the survival rate is closer to 50% than 70%.

3) Ebola patients always have hemorhagic disease, generally dying from internal hemorrhage.

4) Ebola is an airborne disease - Not true so far. It is usually transmitted by touch and exposure to body fluids.

5) Ebola is easy to catch – Not so. You have to have contact with a victim with fever and other symptoms.

6) Ebola is the most serious disease in West Africa – HIV/Aids, respiratory diseases, diarrhea, malaria, and strokes are much more common causes of death.

Predicted U.S. Ebola Cases

There may be as many as two dozen people in the U.S. infected with Ebola by the end of the month, according to researchers tracking the virus with a computer model.

The actual number will probably be far smaller and limited to a couple of airline passengers who enter the country already infected without showing symptoms, and the health workers who care for them, said Alessandro Vespignani, a Northeastern University professor who runs computer simulations of infectious disease outbreaks. The two newly infected nurses in Dallas don’t change the numbers because they were identified quickly and it’s unlikely they infected other people, he said.

The problem with mathematical models if that they offer nothing but estimatec guesses, but their guesses are the best science can offer in stormy political seas.

Thursday, October 16, 2014

Ebola and the Sum of All Fears

It’s the single greatest fear I’ve had in my forty year public health career. I can’t imagine anything – and that includes HIV – that would be more devastating to the world than respiratory transmission of Ebola virus. This is the sum of all fears.

Michael T. Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota

I have been asked by one of my blog readers, now approaching 10,000 each day, to comment on Ebola fears, on whether this festering viral epidemic will engulf the world.

This request reminds me to two things.

One is President Franklin Delano Roosevelt’s comment after Pearl Harbor, “ The only thing we have to fear is fear itself.”

Two is my nurse wife’s comment, “Dick, they say Ebola is only spread through contact with body fluids. What happens when people cough viral droplets. Those are body fluids.”

My wife has a point. Sputum and respiratory droplets are body fluids. What would happen if unsuspected infected Ebola victims coughed or even breathed aboard trains, plans, or in public places, or in crowds of people, spewing viral-laden respiratory body fluids.

We have more to fear than fear itself . We have respiratory-spread body fluids to fear. We have ignorance of how this deadly virus is transmitted, killing 70 % of its victims.

Here are a few comments by Michael Osterholm on the problem in a New York Times artricle. “What We’re Afraid to Say About Ebola," September 12, 2014).

Osterholm's comments were made before Dallas, Ebola's spread to Spain, the Ebola panic in Washington, D.C., the flight of an infected nurse from Dallas to Cleveland, the closure of schools in Dallas and Cleveland, the political finger pointing at the Obama administration, and demands for a travel ban from West African nations of Liberia, Sierra Leone, Guinea, and Nigeria and for the ouster of the Head of the CDC.

I believe three serious mistakes have been made by the Obama administration: 1) not instituting a travel ban from afflicted African nations; 2) not forbidding an infected nurse from Dallas to Cleveland even after she asked permission from the CDC to fly; 3) falsely reassuring the nation that no problem of a pandemic exists.

Otherwise, as an uninvolved bystander, I am in no position to comment.

But I do think it is worth reprinting some of Dr. Osterhholm’s comments from a September 11 New York Times article.

“THE Ebola epidemic in West Africa has the potential to alter history as much as any plague has ever done.”

“There have been more than 4,300 cases and 2,300 deaths over the past six months. Last week, the World Health Organization warned that, by early October, there may be thousands of new cases per week in Liberia, Sierra Leone, Guinea and Nigeria. What is not getting said publicly, despite briefings and discussions in the inner circles of the world’s public health agencies, is that we are in totally uncharted waters and that Mother Nature is the only force in charge of the crisis at this time.”

“There are two possible future chapters to this story that should keep us up at night."

“The first possibility is that the Ebola virus spreads from West Africa to megacities in other regions of the developing world. This outbreak is very different from the 19 that have occurred in Africa over the past 40 years. It is much easier to control Ebola infections in isolated villages. But there has been a 300 percent increase in Africa’s population over the last four decades, much of it in large city slums. What happens when an infected person yet to become ill travels by plane to Lagos, Nairobi, Kinshasa or Mogadishu — or even Karachi, Jakarta, Mexico City or Dhaka?”

“The second possibility is one that virologists are loath to discuss openly but are definitely considering in private: that an Ebola virus could mutate to become transmissible through the air. You can now get Ebola only through direct contact with bodily fluids. But viruses like Ebola are notoriously sloppy in replicating, meaning the virus entering one person may be genetically different from the virus entering the next. The current Ebola virus’s hyper-evolution is unprecedented; there has been more human-to-human transmission in the past four months than most likely occurred in the last 500 to 1,000 years. Each new infection represents trillions of throws of the genetic dice.”

“If certain mutations occurred, it would mean that just breathing would put one at risk of contracting Ebola. Infections could spread quickly to every part of the globe, as the H1N1 influenza virus”

“This is about humanitarianism and self-interest. If we wait for vaccines and new drugs to arrive to end the Ebola epidemic, instead of taking major action now, we risk the disease’s reaching from West Africa to our own backyards.”

Health Care Limbo

Into a limbo large and small since called

The Paradise of Fools, to few unknown.

John Milton 1608-1674), Paradise Lost

ObamaCare will remain in limbo,

As voters, standing with arms akimbo,

Wait until November fourth to go forth,

From all directions – West, East, South, and North,

To vote for Machos, Bimbos, or Dumbos.